Latest data says most sectors to lose out this year

20 October 2000

Latest data says most sectors to lose out this year

By FW reporters

FARM incomes across the UK are plumbing new depths, latest figures reveal.

Recent predictions from accountant Deloitte and Touche suggest almost every sector will make losses this year.

Net farm income on the average lowland family farm of 200ha (500 acres) is expected to drop into the red by £4000 in the year to June 2001. Incomes have already fallen 90% in the past five years, says the firms Mark Hill (see page 27).

Wheat and barley prices are forecast to drop £7 to £66/t, and yields to fall by 5%, says Mr. Hill. Cereal farms could lose £18/ha (£7.28/ha). And rising costs are likely to outweigh milk price increases, leaving mixed dairy farms facing losses of £86/ha (£35/acre).

Farmers are working hard to cut overheads, with a 15% drop in labour costs this year. But fuel and fertiliser costs are adding to the burden.

"But I do believe the future is bullish. There are enough big players with the character and confidence to continue," he adds.

Latest figures from Brussels agency, Eurostat, shows the drop in UK incomes is among the highest in the EU as low commodity prices and rising input costs take their toll.

UK farm profitability was 10% down in the first quarter of the year compared with the same period in 1999, reflecting the slump in farm gate prices and the soaring cost of diesel.

The only country to enjoy a revival in its farmers fortunes was Denmark, where rising pig prices helped farm profits improve by 6%. Overall, EU farmers suffered a 6% income drop.

Rethinking farm policy could pay dividends, says Matthew Bush of FPDSavills Research.

The companys land management performance analysis suggests in-hand farms lost £22/ha (£9/acre) for the year ending April 2000, a 107% drop on 1996.

Contract farming agreements fared better, thanks to reduced capital investment and better management expertise. Incomes fell by 51% to £113/ha (£46/acre) over the same period. "Although these are likely to be weighted towards arable farms, clearly there is a lower risk here," says Mr Bush.

Those letting land on farm business tenancies did best. Income fell just 17% from the 1997 high of £265/ha (£107/acre), he reckons. Continuing demand among the top quartile of producers for additional land is likely to underpin values, says Mr Bush.

"Never before has there been such an imperative to ensure that the potential of every single rural property is harnessed," he says. &#42

See more